Matter of Home Run KTV Inc. v. New York State Liq. Auth.

Determination of respondent New York State Liquor Authority, dated August 18, 2015, sustaining three charges that *452petitioner permitted its premises to become disorderly in violation of Alcoholic Beverage Control Law § 106 (6) and failed to exercise adequate supervision over the premises in violation of rule 54.2 of the Rules of the State Liquor Authority (9 NYCRR 48.2), and imposing an $8,500 civil penalty and a $1,000 bond forfeiture on petitioner, modified, on the law, the petition granted to the extent of vacating so much of the determination that sustained charges 12 and 14, dismissing those charges, vacating the penalty, and remanding the matter to respondent for imposition of an appropriate penalty, and the proceeding brought pursuant to CPLR article 78 (transferred to this Court by order of the Supreme Court, New York County [Shlomo Hagler, J.], entered on or about Dec. 21, 2015), otherwise disposed of by confirming the remainder of the determination, without costs.

Respondent’s determination that petitioner suffered or permitted altercations and/or assaults to occur, leading to a person being shot and assaulted on the licensed premises, is supported by substantial evidence (see 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176, 180 [1978]). An armed gunman and four others entered the premises, and proceeded to one of the karaoke rooms. The gunman pointed a firearm at the individuals in the room. A fight ensued and one of the male patrons was shot in the leg. Another male patron was punched in the head and face. This occurred, despite petitioner’s general practice of patting down patrons upon entry. The petitioner’s head of security’s concessions that he did not know who (if anyone) was manning the front door at the time the perpetrators entered and that the security guard, if present, may have been patrolling the premises at the time of such entry, allow for an inference to be drawn that lax security measures allowed the incident to occur.*

We conclude however that there was an insufficient showing by respondent to support the charges relating to the recovery of alleged drugs at the premises. As a threshold matter, there was no competent evidence that the substance recovered was ketamine. The redacted laboratory report, introduced without proper foundation does not identify the case to which it is attached. Neither the name of the vouchering police officer or his/her precinct is stated on the report. The report states that two items, identified as “ziploc bag(s) cont. solid material,” were analyzed. One of the containers was found to contain ketamine. The analysis of the second sample had not been determined.

*453Assuming there was a sufficient showing that the substance recovered was ketamine, the record is devoid of any evidence that petitioner licensee or petitioner’s manager knew or should have known of the presence of these drugs (see Matter of Richjen Rest. v State Liq. Auth., 51 NY2d 847, 849-850 [1980]; Matter of Albany Manor Inc. v New York State Liq. Auth., 57 AD3d 142, 145-146 [1st Dept 2008]).

Contrary to the dissent’s characterizations, there was no evidence that there had been numerous drug purchases on the premises. Respondent submitted a memorandum from the precinct commanding officer, who was not called to testify, memorializing the execution of the April 23, 2015 search warrant. The memorandum states that the search warrant for the premises was issued by a criminal court judge based upon the “documented purchase of illegal controlled substances in connection with official Departmental enforcement operations.” There is no mention of the number of purchases, where they were made, when they were made, or by whom they were made. From this, the dissent apparently gleans that prior drug purchases were made.

Petitioner’s head of security testified that as a former detective assigned to that area, he was aware of the use of ketamine in the neighborhood and once employed by petitioner, directed his staff to ensure that the patrons were not engaged in the use or sale of any controlled substances. He testified that he was unaware of any documented or undocumented drug sales on the premises.

None of the police officers who testified, including those who executed the search warrant, testified as to any knowledge of any prior purchases of ketamine or other any other controlled substance on the premises or of any drug activity at the premises. One of the executing officers testified about a high use of the drug ketamine in the precinct but testified that he had no knowledge of ketamine use or other drug use at petitioner’s bar and was unaware of any complaints of the same made to the police.

The dissent’s assertion that since a search warrant was issued based upon probable cause, what provided that probable cause most likely was the purchase and use of drugs at the premises, is not supported by the record. The search warrant and search warrant affidavit were not submitted by respondent. There was no testimony as to its contents. Petitioner licensee testified that he was never shown the search warrant and the executing officers testified that they never saw the search warrant, but rather were told of its existence by the *454precinct commanding officer. The officers testified that they were not familiar with the contents of the search warrant or what led to its being attained.

Respondent also failed to establish that inadequate security measures resulted in the presence of the drugs on the premises. The alleged drugs found were contained in two vials, less than one half an inch in length, and a small baggie. The recovery of two small vials and a baggie of a powdery substance is not substantial evidence of trafficking, and is insufficient to establish that petitioner failed to exercise reasonable diligence in supervising the premises (see Matter of 150 RFT Varick Corp. v New York State Liq. Auth., 107 AD3d 524 [1st Dept 2013]).

The dissent points to the testimony of petitioner’s head of security that when security guards were on patrol they would sometimes have a staff member, who was not trained to pat people down, watch the door, as allowing an inference to be drawn that lax security measures led to the presence of drugs at the scene. This however, is purely speculative and not based on the record. The quantity of drugs recovered was very small. The uncontroverted police testimony was that the drugs could easily been have secreted on an individual. There was no evidence that the patrons entering the premises were not subjected to a patdown or that given the packaging, a patdown would have detected drugs. Substantial evidence, which has been characterized as a “minimal standard” or as comprising a “low threshold,” must consist of such relevant proof, within the whole record, “as a reasonable mind may accept as adequate to support a conclusion or ultimate fact” (Matter of Café La China Corp. v New York State Liq. Auth., 43 AD3d 280, 280-281 [1st Dept 2007]), it does not, however, “rise from bare surmise, conjecture, speculation or rumor” (300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d at 180).

In light of the foregoing, we remand for the imposition of an appropriate penalty.

Concur — Sweeny, Manzanet-Daniels and Webber, JJ.

In response to the incident, metal detectors were installed at the premises.